Salted and Roasted Nuts and Seeds

SIC 2068

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing salted, roasted, dried, cooked, or canned nuts or in processing grains or seeds in a similar manner for snack purposes. Establishments primarily engaged in manufacturing confectionery-coated nuts are classified under SIC 2064: Candy and Confectionery Products and those manufacturing peanut butter are classified under SIC 2099: Food Preparations, Not Elsewhere Classified.

The salted and roasted nuts and seeds industry shipped more than $6 billion worth of goods in the late 2000s, according to 2008 figures. About 130 establishments were in operation, employing 5,300 people. Salted or dried peanuts accounts for about half the snack nut market. About 6,100 farms produced peanuts in 2007. For the 2008-09 growing season 5.1 billion pounds of peanuts generated $1.2 billion for peanut growers. The rest of the snack nut market was split among mixed nuts, cashews, walnuts, almonds, pistachios, and macadamia nuts. Salted or roasted sunflower seeds, pumpkin seeds, and other seeds are also included in this category. Nuts and seeds are sold both packaged and as bulk food in grocery stores.

The market for snack nuts has remained fairly level for a decade. Snack food nuts have strong competition from potato chips, tortilla chips, pretzels, and microwave popcorn for the nation's snack dollars, but popularity of this industry category hs remained high. The snack nut and seed industry has handled its competition by introducing new flavors of seeds and nuts. For example, Blue Diamond introduced lemon-chili and ranch-flavored almonds in some parts of the country, and Planters introduced hot and mild versions of spicy peanuts, as well as low-fat honey roasted peanuts.

Manufacturers have also tried more creative packaging to expand their markets. Planters brought out a line of snacks in small, narrow bags and called them Munch-and-Go Tube Nuts. Merchandising efforts for nut and seed snacks are minimal compared to those for potato chips, though. Manufacturers have also been pushing for more shelf space and displays in grocery stores. Nut and seed snacks are often placed in the "impulse" area--near registers. While salted snack nuts and seeds showed flat sales in the early 2000s, many producers and distributors were optimistic about sales of dried nuts because of their nutritional value. In fact, the popularity of low-carbohydrate diets, which pointed to nuts as a healthy snack option, boosted sales of dried nuts, and sales of snack nuts grew 7.7 percent to $1.5 billion in 2003.

Price was another factor working against the industry. For example, about 20 to 25 percent of domestic peanuts are used for snack nuts. With peanut prices kept high by government quotas, restrictions against imports, and support prices, peanut snack manufacturers are somewhat restricted in their supplies and prices. While almond processors and processors of other nuts can buy foreign nuts, peanut processors must buy domestically-grown peanuts. A drought in 1990 sent peanut prices soaring to 30 cents per pound, resulting in deep profit losses for peanut processors. Prices had fallen to 23.4 cents per pound by 2001; that year, the value of peanut production totaled roughly $1 billion. Prices dropped to 17.9 cents per pound in 2002, and the value of production plunged to $594 million. The production of peanuts for snack nuts totaled 3.32 million pounds in 2002.

Peanuts for snack nuts are usually purchased raw by a nut sheller. Processors, such as Planters, purchase the shelled nuts and send them on to blanchers to have the skins removed. (Commercial processors used 161 million pounds of shelled peanuts during January 2000.) Finally, the processing company receives them for roasting. Some snack nut companies, however, do the shelling and blanching themselves.

Many non-peanut nuts are sold through grower-owned co-operatives such as Blue Diamond Almonds and Diamond Walnuts. Blue Diamond was the largest tree nut processor in the world as of 2004, with the capacity to process more than 12 million pounds of almonds daily. California far surpasses other states in terms of almond shipments. Other leading almond producers include Georgia, Massachusetts, Illinois, and Michigan.

Despite a record breaking year for peanuts in 2005, planted acreage fell 25 percent in 2006, or roughly 414,000 acres. Between higher stockpiles of peanuts, increased costs of planting, and lower prices of harvested peanuts farmers were reluctant to designate acreage to peanuts in 2006. Thus, farmers in the Southeast decreased acreage planted to peanuts by 22 percent and the Southwest by 40 percent. Adding insult to injury, the lack of rainfall also affected the Southeast peanut yields.

The total of 1.24 million acres yielded 3.46 billion pounds of peanuts in 2006, down 29 percent compared to 2005 and the smallest crop since 2002. Even though there was a 1.4 billion pound reduction in peanuts, beginning stocks of nearly 2.2 billion pounds helped fulfill demand. In fact, peanut exports to Russia, Mexico, and Canada increased throughout 2006 about 23 percent to 603 million pounds, which compensated for reduced domestic demand. Food use, the largest category of domestic consumption, fell by 31 million pounds to 2.58 billion pounds, which picked up by 2008. With increased exports leveling out high stocks, farmers were able to boost the national average price to 17.7 cents per pound from the 2005 average of 17.3 cents per pound.

Current Conditions

The Salmonella outbreak that surfaced in November 2008, threatening to lower peanut demand, was eventually tied to King Peanut Butter processed by Georgia-based Peanut Corporation of America. This could have proven disastrous for the peanut industry, because high stockpiles from a robust 2008 crop brought farmer stock prices down. More than 3,900 products made with peanuts were pulled off store shelves, affecting over 200 manufacturers. Consequently, processed peanut snack consumption fell 14 percent from 565 million pounds in 2007-08 to 489 million pounds in 2008-09 before recovering.

During the 2009 planting season, peanut growers focused on bringing supply back in line with demand, following a record breaking 2008. Georgia decreased acres allotted for peanuts from 685,000 to 508,000, while Texas followed suit, decreasing acres from 253,000 down to 155,000. A total of 1.11 million acres of peanuts were planted in 2009--the lowest recorded acreage planted since 1915. Peanut growers were expected to increase total acreage by five percent to eight percent for the 2010 planting season.

According to Datamonitor's Product Launch Analytics online database, 289 new nut and seed products were brought to store shelves in 2009. Peanuts used for snacking were expected to decline 11 percent between 2009 and 2010. In-shell peanut consumption was also projected to decline about 9.2 percent during the same time period, with overall peanut demand increasing 3.2 percent for 2010. Meanwhile, exported peanuts were expected to decrease by 17 percent compared to 2009, with raw shell peanut exports falling 28.9 percent and in-shell peanuts declining by a mere 1.9 percent.

Industry Leaders

The industry sales leader was Kraft Foods Inc., which included Nabisco Foods Group (Planters brand), with overall 2008 sales of $42.2 billion and 97,000 employees. Dole Food Company was second, with overall 2008 sales of $7.6 billion and 75,800 employees. Other industry leaders included Lance Inc. (2009 sales of $918 million and 4,800 employees); and Blue Diamond Growers (2009 sales of $709 million and 1,100 employees).

America and the World

Despite a dip in domestic consumption, exported peanuts to Russia, Mexico, and Canada rose 23 percent or 603 pounds in 2006-07. That trend continued into 2008-09 with 805 million pounds of exported peanuts, well above the more than 300 million pounds exported in 2005.

© COPYRIGHT 2018 The Gale Group, Inc. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. For permission to reuse this article, contact the Copyright Clearance Center.

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